International Business Strategy Lecture Slides PDF

International Business Strategy Lecture & readings Lecture 1 ========= Slides Why IBS challenging? - **Liability of foreignness**: additional costs and challenges that firms face when operating in a foreign market compared to domestic firms - **Paradox of fit**: the challenges a fir...

International Business Strategy Lecture & readings Lecture 1 ========= Slides Why IBS challenging? - **Liability of foreignness**: additional costs and challenges that firms face when operating in a foreign market compared to domestic firms - **Paradox of fit**: the challenges a firm faces when their strong fit with one competitive environment becomes a disadvantage when trying to expand to foreign markets. - **Location advantages and firm specific advantages**: - Afbeelding met tekst, diagram, lijn, Lettertype Automatisch gegenereerde beschrijving - **Location advantages:** unique home country's economy, political or cultural environment - Skilled labor, infrastructure, natural resources - **Location bound firm specific advantages:** competitive advantage that is strongly linked to home country and is hard to transfer abroad - Local suppliers, regulatory expertise, brand loyalty - **Non-location-bound firm-specific advantages:** unique firm strength that is transferable across borders - Proprietary tech, strong brand recognition **3 key questions of IBS** - **WHY?** - **ADDING value** - **A**dding volume: more customers - **D**ecreasing costs: more unites to cover fixed costs - **D**ifferentiating: - **I**mproving industry structure: less pressure from stakeholders - **N**eutralizing risks: risk diversification - **G**enerating knowledge: increase knowledge through replication - **WHERE?** - Understand local advantages - **Porters Diamand** -  - **Factor conditions:** nations position in factors of production - Skilled labor, Capital or infrastructure - **Demand Conditions:** the nature of home market demand - Size, sophistication of home market - **Related and supporting industries:** the presence or absence in the nation of internationally competitive suppliers and other related industries - **Firm strategy, structure and rivalry:** the conditions in the nation governing how companies are created, organized and managed - **CAGE Distance** - **Cultural:** language, values, norms, traditions, demographics - **Administrative:** colonial ties, currency, institutions, political system - **Geographic:** spatial proximity, borders, time zones, (dis)connected transportation systems - **Economic**: per capita income, labor costs and workforce, market size & growth **Articles** **The competitive advantage of nations -- M. Porter** Refers to the diamond above (looks like this in the text) Competitiveness does not solely come from natural resources\ low labor or macroeconomic factors Innovation fosters success of countries in specific industries **Why do firms go abroad? Strategies to create value globally -- Juan Alcácer** - Going global does not guarantee success - Three global strategies for value creation - **Deployment**: replicate a successful home-market business model globally - **Development:** expand to gain new knowledge or capabilities - **Deeping:** Reduce costs by leveraging global economies of scale or offshoring - companies need to balance **standardization** with **Local responsiveness** **Distance still matters: the hard reality of global expansion -- Pankaj Ghemawat** Cage model Lecture 2 ========= **Slides** **Key industry (De)Globalization drivers** - **Cost drivers** - Large country cost differentials - Scale & scope economies - Favorable cross-border logistics - Global supply chain networks - High product development costs relative to market life - **Government drivers** - Free trade, open economies - Privatization & deregulation - Trading blocks - Compatible technical standards - Common marketing regulation - **Market drivers** - Convergence of needs/tastes - Globalization of customers - Globalization of distributors - Globalization of brands - Global/transferable marketing - **Competitive drivers** - Competitors aim to operate globally - Increased entry of new global competitors - Increase in ownership by foreign acquirers - Ruse in global M&A and strategic alliances - Multi-market competition  **Entry options:** global & digital world adds complexity and fragility - **Export** - **Alliances** - **Licensing** - **Franchising** - **M&A** - **Greenfield** **5 levers for ADDING value** - **Local adaption** - Greater local appeal and fit through the skillful modification of existing business models - Builds on adding volume, differentiating, neutralizing risks, generating knowledge - **Global economies of scale** - Global economies of scale from concentrating scale-sensitive activities - Builds on adding volume, decreasing costs, and improving industry structure - **Global economies of scope** - Ability to serve global customers that demand a similar range of products across different markets - Builds on adding volume, differentiating and improving industry structure - **Optimal locations for activities & resources** - Exploit CAGE across different countries through arbitrage in costs, structure, skills, regulations, taxes and demand - Builds on decreasing costs, neutralizing risks, and generating knowledge - **Global Knowledge transfer** - Develop superior resources and capabilities and leverage internationally - Builds on all aspects of ADDING value **3 key choices** - **Actors** - **IQ vs EQ** - **The triangle for success: the Interface** - HQ staff as heavy traveler - Expatriates as the bridge - Local management as local Touch - **Local partner: Angels or Devils** - Could be key to success or nightmare - Can accelerate your entry strategy - You have to - Pay attention - Respect - Cultivate to harvest - Put rules on paper like a prenuptial agreement - **Ethics** - Every new country brings new challenges - Create internal rules - Lead by example - Include all stakeholders **Articles** **Converting Global Presence into Global Competitive Advantage -- Anil Gupta & Vijay Govindarajan** - Global presence doesn't automatically create competitive advantage - Expansion alone is not enough, firms must leverage their internation footprint - Challenges in Global strategy execution - Localization vs standardization trade-offs: over-customization increases costs - Risk of market misjudgment: poor adaptation can lead to failure - Coordination complexity: balance between autonomy and centralization **Fundamentals of Global Strategy: Understanding Globalization -- K.C. De** - Firms do not globalize overnight, they follow a path form exporting to full multinational operations - 5 stages of industry & business globalization - **Market entry** - Firms enter foreign markets by exporting or sourcing globally - **Product specialization** - Shifting production to low-cost locations - **Value chain disaggregation** - Breaking down production and relocation activities. - **Value chain reengineering** - Modifying processes for efficiency - **Creation of new markets** - Expanding into emerging markets and adjusting strategies to create new demand - Industry globalization factors (Drivers) - **Market drivers** - Customer demand convergence - **Cost drivers** - Economy of scale, labor cost advantages - **Competitive drivers** - Global rivalry pushing firms to expand - **Government drivers** - Trade policies, regulations and industry support - Clustering of industries - Think of Silicon Valley automobiles in Germany Lecture 3 ========= **Slides** Afbeelding met tekst, schermopname, Lettertype, nummer Automatisch gegenereerde beschrijving  Afbeelding met tekst, schermopname, Lettertype, lijn Automatisch gegenereerde beschrijving **Due process in Global strategic decision making**  Afbeelding met tekst, schermopname, Lettertype Automatisch gegenereerde beschrijving  Afbeelding met tekst, schermopname, Lettertype, lijn Automatisch gegenereerde beschrijving **International division structure** - Most used in early stages of internationalization - Dominant home market with its own structure - The international division draws on products and/or services from the home market -  **Area (geographic) division structure** - Leverages benefits of local adaption/ responsiveness - Gives priority to local market - Prone to activity and cost duplication - Limits economies of global scale and scope - Afbeelding met tekst, schermopname, Lettertype, Rechthoek Automatisch gegenereerde beschrijving **Global product division structure** - Product/service divisions managed globally - To maximize global economies of scale and scope - Requires sophisticated global coordination - Reduced sensitivity to local differences, limited local responsiveness -  **Global matrix structure** - Aim to combine benefits of local responsiveness and global integration - Managers report both to product and country/area manager - Difficult in keeping the balance between the different reporting lines - Decision-making becomes slow and fraught with conflict due to gaps or overlaps in responsibilities - Afbeelding met tekst, lijn, Lettertype, schermopname Automatisch gegenereerde beschrijving **Front- end / back-end structure** - Structure is increasingly in use - Back end of value chain is globally integrated - Front end focus on local responsiveness - Requires excellent linking mechanisms across the front and back end of organizations -  **Articles** **Subsidiary Role Typologies -- bartlett & Ghoshal's model** - Not all subsidiaries play the same role in a multinational corporation - Barlett & Ghoshal proposed a four0role typology - **Strategic importance of local market** - Is the host market a key market/resource hub? - **Subsidiary competence** - Does the subsidiary have unique capabilities - Afbeelding met tekst, schermopname, nummer, Lettertype Automatisch gegenereerde beschrijving - Four subsidiary roles - **Strategic leader (High importance, High competence)** - Subsidiaries co-develop global strategies with HQ - **Contributor (Low importance, High competence)** - Subsidiaries not in key market but develop unique innovations or expertise - **Implementer (Low importance, Low Competence)** - Most common role; subsidiaries execute corporate strategy with minimal autonomy - **Black hole (High importance, Low competence)** - A weak subsidiary in a crucial market; MNCs must either invest in its growth or exit. **Global Integration vs. Local Responsiveness - Bartlett & Ghoshal\'s Typology** - MNCs must balance global efficiency with local responsiveness -  - Four types of multinational strategies - **Multidomestic strategy (Low integration, High responsiveness)** - Each subsidiary operates independently and adapts products/services to local markets - **Global strategy (High integration, Low responsiveness)** - Standardized products, centralized control and cost-focused efficiency - **Transnational strategy (High integration, High responsiveness)** - Tries to achieve both global scale and local adaption - **International strategy (Low integration, Low responsiveness)** - Exports products from home country with minimal changes; HQ controls most operations - Afbeelding met schermopname, cirkel, diagram Automatisch gegenereerde beschrijving Lecture 4 ========= **Slides** Ruble is very correlated to oil price  Russia is very corrupt and it's a issue Afbeelding met tekst, schermopname, Lettertype, lijn Automatisch gegenereerde beschrijving **Articles** **Emerging Markets: Look Before You Leap\"** **- *Tarun Khanna & Krishna Palepu*** - Emerging markets are not uniform, so don't treat them the same - Institutional voids define emerging markets - These are gaps in key market supporting institutions that businesses must address - 4 types of institutional voids - **Credibility enhancers** - Institutions that provide independent validations (auditors, rating agencies) - **Informational analyzers** - Media, analysts, and databases that help companies make informed decisions - **Aggregators & distributors** - Retail networks, banks, and logistics companies that facilitate market access - **Transaction facilitators** - Payment systems, financial institutions, and legal frameworks that enable secure transactions - Why institutions voids matter - **Adapt business model to fill these voids** - **Emerging markets require a customized strategy** - **External factors affect how markets work** - Government policies, historical factors, and cultural aspects **What Every CEO Needs to Know About Nonmarket Strategy - David Bach & David Bruce Allen** - Non market strategy is as important as market strategy, why? - Companies face **regulatory risks, social campaigns, and political interference** - A well-crafted non-market strategy **creates competitive advantages** - Companies must **shape their external environment** rather than react to it - Business operates in two environments - **Market environment** - Competitors, customers, suppliers, and traditional business operations - **Nonmarket environment** - Government regulations, activism, public perception, and social issues -  - **The (IA)^3^ Framework** - **Issue** - Identify key social/political issues affecting business - **Actors** - Determine stakeholders involved - **Interests** - Understand what each acter wants - **Arena** - Identify where these battles are fought - **Information** - Leverage data to shape perceptions and influence decisions - **Assets** - Use reputation, relationships, and coalitions to win non-market battles - Afbeelding met tekst, schermopname, visitekaartje, ontwerp Automatisch gegenereerde beschrijving **\ ** Lecture 5 ========= **Slides** Blue ocean strategy - by W. Chan Kim and Renée Mauborgne - **Create, don't compete** - Do not aim to beat competition, make it irrelevant - Create a bigger pie rather than fight for a slice of an existing pie - **Value innovate, create a unique value proposition** - Link innovation to value - New and novel technology is not enough to create a blue ocean and make the competition irrelevant - **Create win-wins** - Create businesses that make you win, the buyer win, and the community win - **Reduce costs & enhance differentiation** - Blue ocean strategy uses tools and frameworks to minimize costs and maximize differentiation opportunities as you create a new business - Examples - Taxis Uber - Old media (newspapers) YouTube etc. - Mp3 players Apple iPod -  **Tools to create and see blue oceans** - **The strategy canvas** - Afbeelding met tekst, schermopname, lijn, Lettertype Automatisch gegenereerde beschrijving - Helps businesses visualize the competitive landscape - Capture factors the industry competes on - **ERRC Grod / 4 Actions Framework** -  - Forces companies to redefine competition by changing their value offerings **Article** - Three characteristics of successful Blue Ocean strategy - **Focus** - A clear and unique strategy - **Divergence** - Differentiation from competitors - **Compelling Tagline** - Easy to communicate value proposition